Ronald Klain, Assistant to the President and Chief of Staff, on January 20, 2021, issued a memorandum to heads of executive departments and agencies, on behalf of President Biden, imposing a freeze on new regulations pending review by the new administration.
Subject to exceptions for certain emergencies and “other urgent circumstances relating to health, safety, environmental, financial, or national security matters, or otherwise” (and for regulations subject to statutory or judicial deadlines), the memorandum generally directs that:
The memorandum includes language indicating that the freeze applies to sub-regulatory guidance of general applicability with future effect, which could include revenue rulings, revenue procedures, notices, or frequently asked questions (FAQs).
Most regulatory guidance under the 2017 tax law (Pub. L. No. 115-97) often referred to as the “Tax Cuts and Jobs Act” was issued and became effective before January 20, 2021, and is outside the executive action. Nevertheless, the new administration could still review and revisit any prior guidance, subject to applicable limitations in the Administration Procedures Act and Code section 7805.
Separately, President Biden on January 20, 2021, signed an Executive Order that revokes Executive Order 13771 (January 30, 2017).
The 2017 Executive Order, signed by then-President Trump, included requirements that when an executive department or agency publicly proposed a new regulation, it had to identify at least two existing regulations to be repealed. It also directed the heads of all agencies that the total incremental costs of all new regulations, including repealed regulations, were to be no greater than zero ($0) unless required by law or consistent with guidance from OMB.
Thus, an agency no longer is required to identify at least two existing regulations to be repealed each time it publicly proposes for notice and comment or otherwise promulgates a new regulation.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.